How Rich Countries Got Rich and Why Poor Countries Stay Poor

How Rich Countries Got Rich and Why Poor Countries Stay Poor

Erik S. Reinert

Language: English

Pages: 297

ISBN: 1845298748

Format: PDF / Kindle (mobi) / ePub


How Rich Countries Got Rich is a narrative history of modern economic development from the Italian Renaissance to the present day. In it Erik S. Reinert shows how rich countries developed through a combination of government intervention, protectionism, and strategic investment. Reinert suggests that this set of policies in various combinations has driven successful development from Renaissance Italy to the modern Far East. Yet despite its demonstrable success, orthodox development economists have largely ignored this approach and insisted instead on the importance of free trade. Reinert presents a strongly revisionist history of economics and shows how the discipline has long been torn between the continental Renaissance tradition on one hand and the free market theories of English and later American economics on the other. He argues that our economies were founded on protectionism and state activism and could only later afford the luxury of free trade. When our leaders come to lecture poor countries on the right road to riches they do so in almost perfect ignorance of the real history of mass affluence.

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themselves from economic dependency. Schumpeterian cronyism increases the size of the national and world economic pie. Aid-based cronyism adds nothing, but creates an incentive system that moves attention away from creating national values and deeper into foreign dependency. We seem to have unlearned the logic behind policy tools for economic development. Patents and modern tariffs came into being at about the same time, in the late 1400s. These rentseeking institutions were created using the

tasks was to present summaries of many of them to his Duke. In 1656, at thirty years old, Seckendorff published his most important work, Der Teutsche Fiirstenstaat (The German principality), whose thesis was based around two old traditions: a detailed description of a country, its history, people, administration, institutions and resources that had been customary ever since thirteenth-century Italy, and secondly the old German Furstenspiegel (literally the `king's mirror') textbooks or `owner's

historically the most important contribution of Ricardo's trade theory was that, for the first time, it made colonialism morally defensible. Today we have totally dismissed the idea that a strategy of emulation was a mandatory passage point for all nations that are presently rich: we have outlawed the key tools needed for emulation. This chapter uses the history of economic policies - the knowledge of which policies created successful development in the past - in order to create a theory of

connections between a person's productivity and his wages - we look at labour productivity and not at other kinds of productivity. When we look at learning curves, we look at the same kind of productivity explosions as in Figure 6, only from a different angle. Like the productivity explosions, the learning curves, because they measure the same thing, are characterized by a rapid descent over a relatively short time. Any epoch of time is characterized by the fact that certain products, often quite

primitivization rather than modernization in many areas. The burly and humorous general had gained my respect as an efficient chairman of that morning's session. The meeting took place in a big tent on an old coffee plantation made `uncompetitive' by falling coffee prices, even with the minuscule wages paid. Most of the few industries in the region that had developed after independence had been killed off by consistent `structural adjustment' by the Washington institutions. Unemployment and

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